Govt to review fuel price

GOVERNMENT is conducting a petroleum sector pricing study and working on policy measures to address the imbalances in the fuel market.

BY VICTORIA MTOMBA

Speaking in the Senate recently, Energy and Power Development deputy minister Tsitsi Muzenda said when reviewing the fuel price, the maximum Free-On-Board fuel prices would now be based on the lower of the two between the Arab Gulf and Mediterranean markets instead of an average.

“Government is in the process of reviewing the fuel pricing template with a view of improving. In this regard, a Petroleum Sector Pricing Study is being conducted,” Muzenda said.

fuel

She said government was also working on the removal of the wholesalers’ storage and handling costs of $0,015/litre as the majority of companies were utilising the storage facilities operated by National Oil Infrastructure Company and, therefore, not incurring an additional storage to warrant it.

“Applicable margins for wholesale and retail of fuel are now going to be an absolute 6 cents instead of 7% of product cost landed at Msasa, which varies margins unnecessarily for operators when external factors change.
The measure is meant to protect consumers when prices are going up while at the same time ensuring viability of business,” she said.

The price of crude oil has gone down on the international market.
However, fuel prices on the local market have not gone down significantly.

Muzenda said the implementation of the above interim pricing measure resulted in a 7 cents and 4 cents reduction in the maximum pump prices of petrol and diesel respectively.

She said fuel prices in the country are determined through a fuel pricing model, normally referred to as a Fuel Cost Built-Up, which sets the maximum pump prices applicable at any point in time. This model was produced through consultations between the Ministry and the oil industry.
It is therefore an agreed pricing model.

The Fuel Cost Built-Up takes into account all the cost elements associated with supplying fuel to the end user. These cost elements include, FOB (Free on Board) price, pipeline costs, taxes and levies, administrative and distribution costs and profit margins allowed at different levels in the supply chain.

6 Responses to Govt to review fuel price

  1. David February 9, 2016 at 8:56 am #

    It is very clear that govt is unwilling to reduce fuel prices becoz it is benefitting from these high prices by way of high fuel duties and taxes. To make matters worse Zimbabwe fuel is blended with enthanol and yet petrol prices are the highest in the region. The govt is short sighted in doing this. Its taxing fuel to get money to finance consumption (salaries) at the expense of fuel users including the productive sector. Fuel is a huge cost driver in the cost of production and as such high fuel prices together with high electricity tariffs is just making our export goods expensive and uncompetitive. The result is lower forex earnings. The govt is killing the goose that lays the eggs (export sector) and increasing cost of living in Zimbabwe thru increased prices of goods and services. Tax on fuel is just too high needs to be reduced without further delays.

  2. marlon February 9, 2016 at 9:14 am #

    its so sad that Zambian fuel is costing around $0.80/litre yet its more landlocked than Zimbabwe wch is costing $1.31-$1.21. Can the Government re-think on the fuel issue which is killing the production of everything. Fuel is the centre of price reduction. Barrel is just $28-$38 on the international market. What is the essence of blending fuel when it becomes expensive. Leave the petrol or unleaded as it is. Please reduce the fuel to $0.70/litre. we have to enjoy our benefits as Zimbabwean Citizen. surely toto driver our cars to go and refuel in Zambia or South africa tichitiza iyo ethanol and price yekupenga.

  3. mafirakureva February 9, 2016 at 10:43 am #

    How surprising is the pricing mechanism in zimbabwe.We are being charged $1,30 for a litre of petrol with ethanol.This mixture burns so fast such that its actually a ripoff to the consumer.Personally i think we should be afforded the choice to choose the type of fuel we want instead of forcing us on blend.Our engines dont even perfom well and they develop certain problems which are asociated with this type of fuel.Ask any merc owner s/he will tell you this.

  4. UnBanked February 9, 2016 at 11:04 am #

    A study? Someone is being paid again to write and advise on the obvious. Whose cousin is it this time?

  5. James February 9, 2016 at 1:12 pm #

    Ipapa the study will take 2 years while motorists are suffering. Sad

  6. Oto February 9, 2016 at 1:43 pm #

    Panopera study oil yacho oil inenge yakwira pa interMarket we are not kidz ZANU. Ko ndimi mune ma service station achoka, ana Tyson n company… Nxaaa

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